Quantitative strategies based on algorithms are starting to spread across financial markets and hedge funds in particular are adequating to this new approach. Despite the potential, several analysts are skeptical about the adoption of algos and the mix between quantitative and fundamental approaches (“quantamental”), even if it could represent the future of asset management industry.

This trend is confirmed by JP Morgan’s launch in January 2018 of a “data-lab”, with the aim of providing new tools to its asset managers. This business unit has already analysed corporate conference calls during the reporting season with the objective of finding the words that trigger a buying or selling wave in the markets. Moreover, algorithms allow to analyse a huge amount of data in a very short time lapse. An unfeasible task for humans.

However, we can expect that it will take several years to the “quantamental” approach to become the “new normal”. Tha main obstacle is represented by the resistance to change of human beings.

Maybe in the future asset managers will be forced to adapt or die, in the meanwhile algos are elaborating non-stop huge amounts of data with the objective of showing their potential to the most skeptic.